This Frost & Sullivan research service titled An Overview of Zimbabwe’s Vibrant Telecommunications Marketoutlines the competitive environment in telecommunications in Zimbabwe and forecasts revenue and subscriber growth. In this research, Frost & Sullivan's expert analysts thoroughly examine the mobile telecommunications market, with some reference to fixed telecommunications and broadband.

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Market Overview

Demand for Mobile Broadband to Fuel Continued Expansion of Zimbabwe’s Telecommunications Market

Mobile subscriber numbers in Zimbabwe trebled from early 2009 to mid-2010, whereas fixed line subscriptions remained stagnant. With demand for voice services increasingly met, future growth is predicted to occur around mobile Internet and broadband provision. Both mobile operators and Internet access providers will benefit from this second wave of growth. However, increasing political instability in the run-up to elections expected to be held in 18 to 24 months and a business environment not always conducive to proper process are expected to have a negative impact on market prospects. “Mobile operators are the largest contributors to telecommunications revenues in Zimbabwe,” notes the analyst of this research. “As 3G networks expand, mobile operators compete more directly with Internet access providers who, in turn, have entered the voice market, adding to competition.”

Unfulfilled demand, initially for voice and increasingly for data services, is one of the main drivers of growth for mobile communications. Fixed lines are unlikely to meet this demand in Zimbabwe. Mobile subscriber numbers trebled from less than two million at the end of 2008 to 6.9 million in mid-2010. The uptake of 3G by subscribers has also been very high and, at the end of 2010, exceeded the number of fixed line subscriptions. Fixed lines have remained stagnant at 390,000, as the incumbent has struggled for resources to maintain its network.

Market Participants to Focus on Affordability and High-quality Connections

Very high unemployment rates, estimated to be in excess of 80 per cent, mean that consumer spending on communications competes with spending on basic necessities. Affordability, therefore, ultimately constrains average revenue per user (ARPU). “The success of several promotions over the last 18 months has, however, shown the importance of affordable pricing in Zimbabwe,” remarks the analyst. “Offering subscribers a compelling value proposition will continue to be of importance in this market.”

Network quality of mobile networks in Zimbabwe is generally considered to be poor by subscribers. The perceived low network quality has also resulted in a high incidence of multiple SIMs as subscribers hedge their bets between networks. After the dollarisation of the economy in 2009, network capacity of all mobile operators was unable to keep up with demand from consumers, contributing to poor network quality. Capacity constraints have, to an extent, been overcome at present. However, erratic power supply remains a significant challenge for all telecommunications operators. Not only does it result in a degraded service experience for subscribers, but it also adds to operating costs as multiple power sources have to be factored into the cost base. “Networks offering a higher quality service with fewer dropped connections have an advantage over competitors,” states the analyst. “As erratic power supply is a major contributor to poor network quality, decreasing reliance on grid electricity and backup diesel generators by using alternative energy, such as solar, wind or hybrid powered base station designs, will result in long-term OPEX reductions.” This will also help to preserve profit margins in the long-term as ARPU is expected to decline.

Technology

The following technologies are covered in this research:

GSM

3G

CDMA

Fibre Optic

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